The stagnation of production in China, which threatens the supply chain, is the main challenge that the coronavirus is still posing today to the technology industry, to two months of the last outbreak.
The disease strikes day after day to the world economy, which is reflected in the pessimism that round between the investors and the stock markets.
After the cancellation of the Mobile World Congress (MWC) and the difficulties for the leading companies such as Samsung and Apple, the crisis seems to be newly started, while the evil is felt in Europe.
“We like to call (to China) the factory of the world, the ground zero of the manufacturing of electronic products. Even if you have electronic parts that can be developed in the united States, Turkey or South America, it is likely that almost all of the components come from the river delta of Guangdong,” analyzed the president of Blue Silk Consulting, Rosemary Coates.
Although the coronavirus is originated in the city of Wuhan, hundreds of miles to the north, has affected all the productive apparatus of the asian giant. “I had never seen anything like it. This is horrible, what is happening with supply chains to factories in China. The worst thing I have ever seen, and we’re just seeing the beginning”, he warned.
Many factories are working at 15 or 20 percent of their capacity, while others are closed for the quarantine, so it will be impossible to meet the goals delivery.
Coates explained that the magnitude of the crisis is more severe for the way in which the global economy depends on China, unlike what happened in 2002 with the SARS. The expert stated that he “had never seen anything like it. Unfortunately, the technology companies can’t afford to move to the other side and resume his / her operations simply”.
For the also the executive director of the Reshoring Institute, a change like that would take between a year and 18 months. For example, components such as semiconductors require specialized facilities, and the processes of test and qualification to ensure that work are labor-intensive. Moreover, no country can match the volume of chinese production.
While the supply chains of technology may not recover quickly, Tiffany points out that the stock markets will probably recover.
In a statement to Digital Trends, the professor at the Haas School of Business in Berkeley, California., Paul Tiffany, recalled that “companies around the world have taken advantage of the army workforce at low cost available” in that country, after the opening, driven by Deng Xiaoping, who was its leader since 1978.
“The markets react very quickly”, he explained, given that much of the trading is based on algorithms. With other situations of pandemic, I say, Tiffany, “the recovery has been very rapid, in months, not years. The market not only recovered, but the gains were double-digit”.
What will it mean all of this to the people who buy electronic products? Probably higher prices and lack of stock. “The inventories are quite low, because we became pretty good at global sourcing and logistics associated with it. We did very good in the last 10 or 15 years, so there was no reason to keep a lot of inventory,” ms. Coates said.
About it, said they were very pessimistic. “I remember after the tsunami in Japan, I was looking for a car. I wanted to buy a Lexus, and the dealer warned me that they could not entregármelo but that in six months. And the tsunami was just a drop in a cup compared to what today is happening in China.”
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